Currencies

Nought to worry about

Zeroing on too many zeroes

THE countries are disappearing fast where a man can make a million in an afternoon and then blow it all on an evening's drinking. Take Turkey, where you need to be a local-currency millionaire even to buy a good cup of coffee at the current exchange rate of 1.8m Turkish liras to the euro. A redenomination on January 1st 2005 will strip six zeroes from the currency, creating a “New Turkish lira” worth more like 1.8 to the euro. That promises some expensive mistakes for anyone who neglects the difference between old and new exchange rates after a night at the pub.

By Turkey's own count, it is the 50th country to pursue a redenomination in recent years. The move is meant to make the mathematics of currency transactions easier, and to erase the evidence of past inflation in the hope of deterring its return. Turkey has cut its inflation to perhaps 11% this year, from 53% in 2001. But three decades of cheapening money have debauched the lira so much that households routinely think in billions, and banks in trillions or even quadrillions. All those zeroes mean “problems in accounting and statistical records, data processing software and payment systems”, says the Turkish central bank, which calls the redenomination “psychologically and technically essential”.

Romania also wants to break ranks with the countries where you take a shopping-bag to the money-changer. It will cut four zeroes from its currency, the leu, in July 2005. Romania, too, thinks high inflation is behind it. It wants to join the European Union in 2007 with banknotes that other countries can take seriously. Its neighbour, Bulgaria, also a candidate for EU entry, cut three zeroes from its currency in 1999.

Even in Afghanistan, where the money was not even funny under the Taliban, the banknotes are worth substantially more these days than the paper on which they are printed. In January 2003 the government introduced a new “afghani” worth a thousand old ones. A euro buys about 52 afghani now, against 70,000 of them before the switch. At this rate, South Korea will soon find itself an international oddity with its exchange rate of 1,400 won to the euro. How about a redenomination there to transform the OECD's lightest currency into its most confusing—one won to one euro?